Partial commitment in an endogenous timing duopoly

Leppänen, Ilkka

doi:10.1007/s10479-018-03130-w

Cited by 2 publications

(1 citation statement)

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“…They showed that countries will finally reach a simultaneous equilibrium if both decide to be the first movers in the game. Leppänen (2020) studied partial commitments in a duopoly associated with endogenous timing. He showed that both countries would prefer to be followers rather than leaders under certain conditions.…”

Section: Introductionmentioning

confidence: 99%

Endogenous timing, strategic tariff game and bilateral trade in vertical oligopoly

Chen

Kuang

2022

Pacific Economic Review

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This paper builds an observable delay game in endogenous timing to study the possible occurrence of trade wars in a vertical, bilateral trade model. It examines the effects of production cost differences and order of moves on optimal tariffs, market equilibria, dumping margin and social welfare in both fixed timing and endogenous timing games. In a fixed timing game, it shows that price dumping in the intermediate good market arises from differences in country-specific final good production costs. Different from Bernhofen (1995; Journal of International Economics), trade costs resulting from reciprocal tariffs in upstream markets can reverse the price dumping under certain conditions. In an endogenous timing game, this paper finds that the magnitude of cost differences significantly influences countries' decisions on the order of moves in a strategic tariff-making game. Both countries want to be the first movers under a small cost difference and consequently reach a simultaneous equilibrium result. This demonstrates that the second-best equilibrium proceeds under certain conditions. Under a large cost difference, sequential policy-making is the subgame perfect Nash equilibrium. If the cost difference is sufficiently large, both countries have an incentive to launch a trade war as a multiple equilibrium game.* We are indebted to the editor, Professor David Cook, and two anonymous referees for constructive comments and helpful suggestions.

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Section: Introductionmentioning

confidence: 99%

Endogenous timing, strategic tariff game and bilateral trade in vertical oligopoly

Chen

Kuang

2022

Pacific Economic Review

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Corporate social responsibility and network externalities: a game-theoretic approach

Buccella,

Fanti,

Gori

et al. 2023

Ann Oper Res

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This research revisits the pioneering work by Katz and Shapiro (Am Econom Rev 75:424–440, 1985) with network (consumption) externalities in a twofold way: first, it considers Corporate Socially Responsible (CSR), instead of profit-maximising, firms; second, it uses a game-theoretic approach and analyses the commitment decision game in which firms face the binary choice to credibly commit ($$C$$ C ) or not to commit ($$NC$$ NC ) themselves to an announced output level in the first decision-making stage. Competition at the market stage occurs à la Cournot. Results show a rich spectrum of sub-game perfect Nash equilibrium (SPNE) outcomes, ranging from the prisoner’s dilemma (self-interest and mutual benefit of output commitment conflict) to the anti-prisoner’s dilemma or deadlock (self-interest and mutual benefit of output commitment do not conflict), passing from the coordination to the anti-coordination game. These outcomes depend on the intensity of the social concern in the firm’s objective and the network size. The article also pinpoints the welfare outcomes corresponding to the SPNE and extends the analysis to a Stackelberg rivalry setting.

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Partial commitment in an endogenous timing duopoly

Cited by 2 publications

References 32 publications

Endogenous timing, strategic tariff game and bilateral trade in vertical oligopoly

Endogenous timing, strategic tariff game and bilateral trade in vertical oligopoly

Corporate social responsibility and network externalities: a game-theoretic approach

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